Scovell: State must regulate industries, environment

THE Government is obligated to regulate industries and the business environment, according to PNG Manufacturers Council chief executive officer Chey Scovell. He said it enabled the collection of revenue from businesses through tax. Scovell said that although local manufacturers were among the most compliant in paying tax, Government’s lack of regulatory presence and progressive increase in tax adversely impacted their operations. “Excise is an important contributor to the national purse of every Government. Producers of excise are generally heavily regulated and controlled, and an outcome of this is that businesses operating in the excise industries are among the most well managed businesses. Well-managed meaning having structured systems throughout their entire operation that are at or above best practice,” he said. “These systems allow both the company and the Government to have greater confidence in the forecasts of the operation and confidence in the collections. “Again, generally speaking, governments have a very good strike rate at collecting all fees and charges from excise operators, with most collection leakage stemming from MSME and other predominantly cash operated businesses (food and beverage, retail, entertainment). “On the pretence that they are a luxury consumption and present health and social concerns, for more than a century the most profitable business in the world has been taxing excise products. “Take cigarettes for example. The manufacturer must find all its costs and profits in 25 per cent or less of the sellable price, whereas the government can do nothing and collect over 75 per cent. “There are no industries or workers to my knowledge that would elect to work or invest when a third party (Government) gets to take the lions share for nothing invested. “Very few people complain about increasing taxes on excise products. When pressured to increase revenue, it’s always a soft target for governments. But it has gone too far. “Around the world, governments are realising the painful lesson of overtaxing excise goods.”